Sailing through Market Volatility: How Equity Mutual Funds Performed in Financial Year 2025

However, the market sentiments turned bleak in the latter half of the year. The bellwether Nifty 50 index has plunged 13% from its peak of September 2024, marking its most prolonged losing streak since 1996. ​

This downturn is primarily attributed to intense outflows by foreign investors amid a slowdown in corporate earnings growth, a relatively slow GDP growth, global uncertainties caused by US tariff announcements, and stretched valuations, to name a few.

Overall for FY 2025, Sensex gained 3.7%, with BSE 500 at 3.5%, BSE Midcap at 5.2%, and BSE Smallcap at 7.4% so far (as of March 20, 2025).

Despite sharp volatility in the market, a vast majority of equity mutual funds across sub-categories not only delivered positive returns but also generated an alpha over their respective benchmark indices. Among the 229 diversified equity mutual fund considered, 164 schemes did better than their benchmarks, an outperformance rate of about 72%. The top performing scheme rewarded investor with a gain of 24.9%, while the bottom performer lost 16.1% in value.

Mid Cap Fund was the top performing category with average returns of 10.1% with 23 out of the 30 schemes in the category outperforming their benchmarks. Invesco India Mid Cap Fund delivered the highest return among its peers generating absolute gains of 18% while the bottom performing scheme Quant Mid Cap Fund delivered negative 2.9% returns.

The Contra Fund and Large & Midcap Fund category followed with average returns of about 9%. All three schemes in the Contra Fund category outpaced their benchmarks. The top performing scheme, Invesco India Contra Fund, generated absolute returns of 13.8%, while the bottom performing scheme, SBI Contra Fund, delivered 6.5% returns but managed to maintain a lead over the benchmark.

In terms of Large & Mid Cap Funds, 23 schemes out of 31 schemes did better than the benchmark. DSP Equity Opportunities Fund lead the category with gains of 15.2% while Quant Large & Midcap Fund found itself among the laggards with negative 8.8% returns.

The next in the list are Small Cap Funds and Multi Cap Funds that delivered average returns of about 8%. Despite sharp corrections in the small-cap segment over the last quarter of FY 2025, 19 out of 30 schemes in the Small cap Fund category outperformed their benchmarks. Bandhan Small Cap Fund was the scheme with the highest return in the Small Cap Fund registering a staggering 20% gains while Quant Small Cap Fund underperformed its peers, delivering 0.8% returns.

Within the Multi Cap Fund category, 20 out of 30 schemes outperformed their benchmarks. LIC MF Multi Cap Fund turned out to be the top performing Multi Cap Fund having recorded 16.3% absolute gains, while yet another scheme from Quant Mutual Fund, Quant Active Fund, found itself among bottom performer having lost 5.3%.

The Focused Fund category generated 7.2% average returns with 19 out of 28 schemes outperforming their benchmarks. DSP Focus Fund was the top performing Focused Fund having offered 16.3% returns while Motilal Oswal Focused Fund suffered with negative 7.1% returns.

The popular Flexi Cap Fund category recorded average returns of 6.7% with 27 out of 39 schemes faring better than the benchmark. Motilal Oswal Flexi Cap Fund registered the highest return at 17.7%, while Samco Flexi Cap Fund disappointed with negative 16.1% returns.

The relatively stable Value Fund and Large Cap Fund category offered average returns of 6.2% and 5.8%, respectively. Among Value Funds, 12 out of 21 schemes out performed their benchmark. The top performing UTI Value Fund returned 14.6% whereas Quant Value trailed its peers with negative 2.8% returns.

The Large Cap Fund category saw 18 out of 33 schemes maintaining a lead over the benchmark, evidently carrying higher underperformance rate of about 45%. Motilal Oswal Large Cap Fund delivered a staggering 24.9% absolute return, turning out to be category topper; Quant Large Cap Fund was the bottom performer having tanked 3.2%.

To conclude...

Mutual Funds' returns over the short term is not a reliable indicator of their future potential. Thus, one should avoid making investment or redemption decisions based on recent performance over say, 6 month or 1 year. One should always select schemes that aligns with risk appetite, investment horizon, and financial goals. Assess the schemes based on various qualitative and quantitative parameters before finalising them for the investment portfolio.

Watch this video to know about the top-performing mutual funds amid the recent market correction:

Note: This write up is for information purpose and does not constitute any kind of investment advice or a recommendation to Buy / Hold / Sell a fund. Returns mentioned herein are in no way a guarantee or promise of future returns. As an investor, you need to pick the right fund to meet your financial goals. If you are not sure about your risk appetite, do consult your investment consultant/advisor. Mutual Fund Investments are subject to market risks, read all scheme related documents carefully. Registration granted by SEBI, Membership of BASL and certification from NISM no way guarantee performance of the intermediary or provide any assurance of returns to investors.

The securities quoted are for illustration only and are not recommendatory.

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DIVYA GROVER is the co-editor for FundSelect, the flagship research service of PersonalFN. She is also the co-editor of DebtSelect. Divya is an avid reader which helps her in analysing industry trends and producing insightful articles for PersonalFN’s popular newsletter – Daily Wealth letter, read by over 1.5 lakh subscribers.
Divya joined PersonalFN in 2019 and has since then used stringent quantitative and qualitative parameters to analyse funds to provide honest and unbiased research to investors. She endeavours to enable investors to make an informed investment decision and thereby safeguard their wealth.

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.
This article is for information purposes only and is not meant to influence your investment decisions. It should not be treated as a mutual fund recommendation or advice to make an investment decision in the above-mentioned schemes.